Islandia, N.Y. (April 21, 2004) -- Beleaguered software giant Computer Associates International Inc. said that it fired nine employees in its legal and finance departments as a result of issues raised during an investigation by the board's audit committee into the company's accounting practices.
The terminations included four employees in the legal department and five in the finance department. Eight of the employees were based in CA headquarters in Islandia, N.Y. One was based in Atlanta.
The audit committee, headed by former Securities and Exchange Commission chief accountant Walter P. Schuetze, is close to completing its investigation and its assessment of whether the firm will need to restate prior financials.
The company has been under investigation by the U.S. Attorney's Office and by the SEC for past accounting practices. The company prematurely recognized revenue from software license contracts in the fiscal year that ended March 31, 2000.
The fate of the firm's chairman and chief executive, Sanjay Kumar, is said to be in question, according to published reports, which also said that the company's board is expected to meet this week. No news regarding Kumar's future at the firm had been announced at press time.
The firings and the speculation on Kumar's future come on the heels of guilty pleas earlier this month by three former CA employees, including former chief financial officer Ira Zar. The trio pled guilty to federal charges, including conspiracy to obstruct justice and conspiracy to commit securities fraud. In addition, the trio settled civil fraud charges with the SEC.
The company said that it is drawing on staff from other areas and from its international subsidiaries to temporarily handle work responsibilities in the affected departments, and still expects to release its fourth quarter and 2004 fiscal year-end results as scheduled on May 12. CA also said that it had responded to a Jan. 8 notice from the SEC that it could bring civil enforcement proceedings against the company.
In a statement issued Monday, the company said that its audit committee "continues to believe that the company's new business model and financial reporting are unaffected" by the accounting practices that were in place prior to the company's adoption of the new model in October 2000.
-- WebCPA staff
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